Chinese automakers have long been relying on cheap cars to boost sales, but some of them are working hard to build their brands and move upscale.
In January, Chery Automobile Co. also told Automotive News China it would implement a similar strategy this year. Chery and Geely are China's two leading self brand car makers.
Geely's president Li Shufu said his company will start dividing its new products into three sub-brands, although the multi-brand strategy will be only adopted for the domestic market.
The company will continue to sell its products overseas under the current Geely brand.
Geely launched its first sub-brand, Global Hawk, in November last year. Currently, only the small hatchback Panda is sold under this sub-brand. All the rest, including the KingKong, Freedomship, Merrie and Ulio subcompact sedans, the Eagle subcompact hatchback and the Vision compact sedan, are still sold under the Geely brand.
Geely's spokesperson Wang Zhiliang said the company will introduce two other new sub-brands, Dihao and Shanghai Englon, later this year.
Mr. Wang said the two new sub-brands are for higher class products which will have higher prices than Geely's existing vehicles. At present, Geely's cars are priced between 40,000 yuan ($5,848) and 70,000 yuan ($10,234).
Four models will be launched under these two sub-brands, according to Wang.Under the Dihao sub-brand, Geely will start selling a compact sedan and its hatchback version at the same time in May or June, and a mid-sized sedan later this year. Dihao means "regal" in English. The company will also start trial production of an SUV under the Dihao sub-brand this year. The vehicle is expected to hit the market in 2010.
Under Shanghai Englon, Geely will launch the London Taxi TX4 and another mid-sized sedan. Geely has yet to decide when it can start selling these two models. Further details about these four models are not yet available.
New models aimed at consumers and businesses
Targeting young customers, products to be sold under the Global Hawk sub-brand will be small size vehicles with trendy designs, Mr. Wang said.
Meanwhile, the Dihao sub-brand will cover family cars while Shanghai Englon will include the London Taxi and vehicles mainly for business uses, he adds.
Products to be launched under the three sub-brands will carry their own badges, but the existing models will continue to carry the Geely badge.
"2009 is very important for Geely's strategic transformation," Mr. Wang said, adding that the new brands and new models will help improve Geely's brand image.
In 2008, Geely sold 221,151 vehicles in China, about the same as in 2007, according to Jato Dynamics. Mr. Wang said his company targets to achieve a 25 percent sales growth in 2009
Geely invests in R&D
Geely has also vowed to strengthen its research and development capability as part of its efforts to rid itself of the image of a cheap car maker.
Geely plans to spend more than one billion yuan ($146 million) on research and development in 2009, which will account for about 8 percent of the company's annual sales revenue, Geely's chairman Li Shufu told Automotive News China in Beijing. Chery has about 1,700 engineers in its R&D center.
Geely will focus on making fuel-efficient, safe and eco-friendly cars with good quality. "Geely will no longer make cars with prices of below 40,000 yuan ($5,848)," Mr. Li said.
Geely is pushing for a national standard for tire pressure monitoring systems, he adds. Geely developed its own tire pressure monitoring system last year. A tire pressure monitoring system warns a car driver when the tire pressure falls below a certain limit.
Geely also unveiled a methanol-powered Haifeng small car last year. In January this year the government started subsidizing fleet operators such as taxi companies and post offices if they buy hybrid, electric and fuel-cell vehicles.
Mr. Li said he has urged the government to include methanol-powered cars into the subsidy program.
Geely sold 184,794 units in 2008, up 0.3 percent from 2007, according to Jato Dynamics.
Kevin Huang and Lan Lan are China-based reporters for Automotive News China, which is published by the Automotive News Group of Crain Communications Inc. Crain is also the parent company of the Ad Age Group. This article was first published in Auto News China.
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